Foreign loan disbursements to Pakistan drop 43 pc to USD 3.6 billion
Pakistan's Foreign Loan Disbursements Drop by 43%
In the first five months of the current fiscal year, Pakistan's foreign loan disbursements have decreased by 43%, totaling USD 3.6 billion, compared to USD 6.4 billion in the same period last year. This information was reported by The Express Tribune, based on official data.
Loan Sources and Challenges
Out of the USD 3.6 billion, less than USD 2.6 billion came from bilateral and multilateral lenders, excluding the IMF's first loan tranche. Even with the IMF loan, the total disbursement was USD 2.8 billion lower than the previous year. Last year, Saudi Arabia and the UAE contributed significantly with USD 2 billion and USD 1 billion, respectively.
Future Expectations and Financial Struggles
For the current fiscal year, Pakistan expects USD 24 billion from new loans and debt rollovers, including USD 5 billion from Saudi Arabia and USD 4 billion from China. However, the country faces challenges in repaying USD 12.7 billion in maturing deposits and USD 3.8 billion in Chinese loans. Despite hopes that the IMF program would unlock more funds, Pakistan is struggling with a low credit rating and slow project progress.
Current Loan Disbursements
From July to November, disbursements reached only 15% of the annual target. Saudi Arabia extended a USD 3 billion debt repayment for one year. The World Bank has not provided new budget support loans, and project funding is slow. Pakistan budgeted USD 24 billion in borrowing, but the USD 3 billion rollover from the UAE and IMF repayments are not in the federal accounts.
Multilateral and Bilateral Contributions
Multilateral creditors provided USD 1.4 billion, 32% of the annual target, with the Asian Development Bank (ADB) contributing USD 764 million. The World Bank released USD 398 million, and the Islamic Development Bank gave USD 210 million. Pakistan's plan to raise USD 1 billion through sovereign bonds has stalled, and only USD 200 million in commercial loans has been received, mainly from China. Bilateral creditors, including China and France, disbursed USD 202 million, a 63% decrease from last year.
Doubts Revealed
Foreign Loan Disbursements
This means the money that Pakistan borrows from other countries or international organizations. Disbursements refer to the actual amount of money given to Pakistan from these loans.
Fiscal Year
A fiscal year is a one-year period that governments and businesses use for financial reporting and budgeting. It may not always start in January; for example, in India, it starts in April.
Maturing Deposits
These are amounts of money that Pakistan has borrowed and now needs to pay back because the time period for the loan has ended.
Chinese Loans
These are loans that Pakistan has taken from China. Like borrowing money from a friend, Pakistan needs to pay this back to China.
Multilateral Creditors
These are organizations or groups of countries that lend money to other countries. They include institutions like the World Bank and the Asian Development Bank.
Asian Development Bank
This is an international organization that provides loans and financial help to countries in Asia, including Pakistan, to support development projects.
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